Free trade bloc a game changer

Otis Daniels_Finck
The African Development Bank is actively supporting or looking to support initiatives to boost trade and improve livelihoods for Africans.

The African Development Bank (AfDB), the United Nations Industrial Development Organisation (UNIDO) and International Trade Centre (ITC) organised the session last week in the wake of the entry of the AfCFTA on 1 January 2021.

The free trade area brings together 1.3 billion Africans in a U$3.4 trillion economic bloc.

The bloc is the largest free trade area since the establishment of the World Trade Organisation, and economists project that its benefits and impacts could lift tens of millions out of poverty over the next 15 years.

According to Pamela Coke-Hamilton, the International Trade Centre (ITC) executive director, the success of the African Continental Free Trade Area (AfCFTA) hinges on the ability of African firms to understand and capitalize on the trade related opportunities offered by the AfCFTA.

Coke-Hamilton pointed out that the Aid-for-Trade initiative which promotes the role of trade in development and supports building productive capacities should focus on three priorities to boost the private sector’s role in AfCFTA.

“These include empowering businesses with skills and know-how; fostering multi-stakeholder partnerships to attract investment for greater value addition and enhancing market connections using e-commerce and digital platforms.”

Discussion focused on boosting private sector involvement in policy dialogues on trade, investment and infrastructure, strategies to increase participation by micro, small and medium enterprises, and the need for greater partnerships to attract investment in promising industries.

Alan Kyerematen, Ghana Minister of Trade and Industry, proposed that bridging information gaps between governments and the private sector would help build confidence around the free trade agreement and noted that fiscal incentives, including subsidies, might be needed in some instances.

Li Yong, the Director-General of UNIDO emphasised that the private sector’s role in speeding up industrial development and economic diversification, particularly in the context of the ongoing pandemic and other development challenges. “The private sector accounts for 80% of total production, two thirds of investment, three-quarters of credit and employs 90% of the working age population.”

He also noted “several determining factors, including an enabling business environment, affordable connectivity, accelerated digitalisation and opportunities to forge strong public-private partnerships” as crucial to ensuring businesses’ commitment to trade and invest in the AfCFTA.

The AfDB, UNIDO and the ITC have each engaged with the private sector at the continental, regional and sub-national level to facilitate the African business community’s access to the new single market, said Solomon Quaynor, AfDB Vice President, Industry, Infrastructure, Private Sector and Trade.

The AfDB is actively supporting or looking to support initiatives to boost trade and improve livelihoods for Africans, Quaynor said.

He cited the Ethiopian Commodity Exchange as a model to be replicated across Africa, referring to the commodities exchange established in 2008 that is transforming the country’s agricultural trade.

“African farmers receive only 20-25% of the final price of their market produce, compared to the 70-85% that Asian farmers receive.”

Quaynor also named AfroChampions, a public-private partnership designed to accelerate economic integration and support the emergence of African multi-nationals, as an initiative that is making an impact.